U.S. neighbors fret over protectionism

U.S. President Barack Obama chats with his Mexican counterpart Felipe Calderon before a bilateral meeting at the Cabanas Cultural Center in Guadalajara, Mexico.

TEXT OF STORY

STEVE CHIOTAKIS: President Obama is meeting with his Canadian and Mexican counterparts in Guadalajara today. It's the annual meeting of North American leaders. And high on the agenda will be protectionism. Our neighbors to the north and south are worried that the U.S. has been violating the spirit of the North American Free Trade Agreement -- NAFTA. Alisa Roth explains.


Alisa Roth: When Congress passed the economic stimulus package in February, there was one stipulation for all those projects: They have to use U.S.-based companies and American-made products. Obama made free-trade partners exempt from that rule. But state and local governments are still allowed to insist on goods made in the U.S. Canada and Mexico say that's hurting business. And that it goes against the idea of NAFTA.

Gary Hufbauer studies trade at the Peterson Institute for International Economics. He says it's not really about lost business.

GARY HUFBAUER: The numbers aren't overwhelming particularly compared to the amount of trade between our countries. However the symbol to those countries is very strong.

Hufbauer says the Buy American regulation makes it harder for the stimulus money to do what it's supposed to:

GARY HUFBAUER: There are cases where, say, laying some water pipe is held up because they can't get the supplies here in the U.S.

Meanwhile, some Canadians are threatening to retaliate. By boycotting U.S.-made products.

I'm Alisa Roth for Marketplace.

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